‘Clean’ coal developers resist cap on electric rates

General Assembly veto session could vote on project

Minor tweaks to an Illinois law making a proposed “clean” coal power plant in Taylorville possible are negotiable, says project developer Tenaska. However, a major change – an additional cap on consumer rate increases – is not an option.

Both Tenaska, the Nebraska-based company that’s pushing for the coal-to-gas Taylorville Energy Center, and its most visible opponent, the STOP Coalition (Stop Tenaska’s Overpriced Power), expect the Illinois General Assembly to consider the project during this fall’s veto session, which starts next week.

The General Assembly in 2008 approved legislation that would require energy suppliers to buy electricity from the proposed plant at above-market prices, while capping rate increases for residential consumers at 2 percent. No such protection for higher bulk customers such as manufacturers and some government entities was included in the law, which was negotiated in part by consumer advocates with the Citizens Utility Board and the Attorney General’s office.

Tenaska and the STOP Coalition each say that “conversations” – but not “negotiations” – over potential legislation changes have taken place with lawmakers, but neither would provide further detail.

A consultant for Tenaska, Dave Lundy, says he wouldn’t be surprised if lawmakers make small changes to the original legislation, but he wouldn’t speculate as to what those changes could include. “As long as power gets purchased and banks and other financing sources can get paid back, there’s a willingness [from Tenaska] to figure out any creative ways to solve concerns,” Lundy says. He adds that capping large business customers’ rates would be a major change and not an option for Tenaska. “We don’t anticipate that lawmakers are going to fundamentally rewrite that law,” he says.

Phil O’Connor, spokesman for the STOP Coalition, says that Tenaska’s refusal to consider a rate cap for large business consumers suggests that the company expects “massive cost overruns” that would be pushed onto such customers. He also references the Illinois Commerce Commission’s September report to lawmakers that calls the 2008 law’s failure to include such a cap as anti-competitive. [See “Report criticizes ‘clean’ coal plant,” Sept. 9, 2010.] “It seems to me that at an absolute minimum, the Commerce Commission’s suggestions should be addressed,” O’Connor says.

A recent poll, only part of which was shared with Illinois Times, conducted for Tenaska by Anzalone Liszt Research shows that, where the state’s energy policy is concerned, Illinois residents are less concerned about preventing rate increases (9 percent) than they are about bringing in new jobs (36 percent). The 800 Illinoisans surveyed across the state were also asked to rank the importance of reducing reliance on foreign energy (32 percent), reducing reliance on fossil fuels including coal (14 percent) and protecting the local environment (7 percent). The poll has a margin of error of 3.5 percent.

Tenaska says its project will bring 155 permanent jobs and 2,500 temporary jobs to the central Illinois area. The STOP Coalition says that, due to increased costs to manufacturers and other large business electricity customers, the state could lose about 15,000 jobs each year.

“During this legislative session when they’re dealing with tax increases and pensions, the last thing they [lawmakers] need to be doing is approving a rate increase to customers,” O’Connor says.